The CL/NQ experiment
- Thread starter Gabe2004
- Start date
Thank you for the answer.
It all makes sense except for 1 thing.
Before one has evidence that they have a positive expectancy plan, they will doubt the plan.
Back testing is 1 way of eliminating doubt but the emotions are different in sim trading compared with live trading.
Emotions can play tricks with us. we can see setups that are not there (sort of like the new car that you bought. Suddenly half the town is driving the same car).
I agree that taking all setups according to A plan is the way to go. The problem is that until you prove to yourself that your plan has an edge you are going to doubt it the minute there is a hick up.
I am at a point that I am quite certain that my system/plan has an edge and I am trying to follow it to the T.
There is still some room for improvement of the plan but overall I am satisfied with it.
The hick ups that you saw in my equity curve are the result of my mental hick ups.
The next few weeks will tell if I really have an edge and whether I can stick to my plan, or I was lucky.
Greetings Gabe,
Your response is logical, familiar, and all too human. It is obvious that you have done most of the right things to set yourself up for the success you seek. You have created a plan, you are executing the plan to the best of your ability, and you are evaluating the efficacy of the plan.
However, what you have not taken into consideration is the âmindsetâ necessary for the plan to produce the results you desire. You have not learned to âthink in terms of probabilitiesâ when you are trading. You are currently operating on a trade-by-trade basis, living and dying based on the results of your last trade.
Study the words that NoDoji just penned tonight in this very thread, and youâll see what I mean:
âI put on trades every day that would've seemed absolutely perplexing and impossible to me in the past. I'm now totally comfortable because I acted my way into believing that the results I saw in my end of day analyses of price action were attainable in real time if I trusted myself.â
What she has learned to do is to forget about the results on any individual trade, and to think in terms of the series of her tradesâ¦which she âtrustsâ to produce a positive outcome. This "trust" is evident because of her firm belief in her extensive testing. I believe you need to do much the same.
Just my 2 cents worth.
KDASFTG
Your response is logical, familiar, and all too human. It is obvious that you have done most of the right things to set yourself up for the success you seek. You have created a plan, you are executing the plan to the best of your ability, and you are evaluating the efficacy of the plan.
However, what you have not taken into consideration is the âmindsetâ necessary for the plan to produce the results you desire. You have not learned to âthink in terms of probabilitiesâ when you are trading. You are currently operating on a trade-by-trade basis, living and dying based on the results of your last trade.
Study the words that NoDoji just penned tonight in this very thread, and youâll see what I mean:
âI put on trades every day that would've seemed absolutely perplexing and impossible to me in the past. I'm now totally comfortable because I acted my way into believing that the results I saw in my end of day analyses of price action were attainable in real time if I trusted myself.â
What she has learned to do is to forget about the results on any individual trade, and to think in terms of the series of her tradesâ¦which she âtrustsâ to produce a positive outcome. This "trust" is evident because of her firm belief in her extensive testing. I believe you need to do much the same.
Just my 2 cents worth.
KDASFTG
Thank you for your post.
What gave you the above idea?
You may be right but I am not consciously aware of it.
Maybe you can elaborate.
I am very numbers oriented and I believe that my plan has a solid foundation based on statistics and visual observation.
What I do suffer from is the desire to be right or conversely, not wanting to be wrong.
I am aware of this but so far I have not found a viable solution.
incidentally, I just made a deal with 1 of my friends in which I have to pay him every time I don't enter a trade by my rules.
So far so good.
Gabe
You basically have to retrain your desires/thoughts/expectations etc. Sheer will power is not going to work as it is of limited capacity, and practice is different to training.
As a suggestion....
take the idea Nodoji gave you...
"You see a valid setup and it signals a trade.
As soon as you see the signal, ask yourself, "Would I log this as a valid trade on a spreadsheet if I was analyzing the chart at the end of the day?"
If you answer "Yes" then immediately place your order and then sit on your hands until the trade plays out or a valid opposing setup appears and signals a new trade."
.......................
Take it a step further....actually write it down the old fashioned way (as well as use modern technology). Use pen not pencil
This way there is less issue of later denial.
There are reasons for this you might like to investigate further.4http://lifehacker.com/5738093/why-you-learn-more-effectively-by-writing-than-typing
It seems incredibly tedious, but its amazing how quick the results can be if you are open to it, and its better than continual frustrations
There is a conscious mind and a sub-conscious mind.
The sub-conscious mind is evidenced when one does over and over again something one consciously does not want. Simple examples: alcoholics, etc...
One can play "tricks", however the sub-conscious mind will find other ways to fulfill whatever it has to fulfill. Hence cases where suddenly one area goes well, but suddenly another area completely falls apart.
Just the human condition : a conscious mind and a sub-conscious mind.
Quote from SIUYA:
Take it a step further....actually write it down the old fashioned way (as well as use modern technology). Use pen not pencil
This way there is less issue of later denial.
It seems incredibly tedious, but its amazing how quick the results can be if you are open to it, and its better than continual frustrations
A professional psychologist once told me this same thing about journaling and I've kept my trading journal in front of me with pen and notepad ever since.
This is a serious problem which prevents you from thinking in terms of probabilities.
In trading, these actions are wrong:
Hesitating, then chasing an entry
Positioning in advance of a valid signal in an effort to get a better price
Moving stops around to micro-manage a trade (or removing a stop loss altogether to avoid realizing a loss)
After getting stopped out nearly to the tick of a turn, immediately trading again to get revenge on the market for "screwing" you
Trading without any valid signal based on what you think price should do
And so on...
What is NEVER wrong is taking a loss on a valid trade according to your risk management rules. The trade is not wrong, nor are you wrong for having taken it.
I've posted this before, but it's a gem:
Mark Douglas: Thereâs no way to know the sequence of wins and losses. If we want to be able to trade our methodology in an effective fashion, to be able to utilize this methodology in a way where we can extract the maximum amount of profit that it makes available to us based on the pattern that it identifies, we have to do it in certain ways.
Our mind has to be free to be able to execute these trades without making trading errors and the trading errors come from believing that because the pattern is present, that itâs going to give me a winning trade on THIS one; THIS trade is going to be a winner. You canât think that way. Thatâs the way the typical trader thinks. The typical trader thinks "Iâm not gonna put on this trade unless I think itâs gonna be a winner or why would I do it?â
Trading a technical methodology or a technical pattern does not have anything to do with being right or wrong. Itâs just an odds game. Youâve got to be able to take every single trade because you donât know the sequence of wins and losses. Youâve got to be able to identify what your risk is and thatâs simply "How much am I willing to spend to find out if other traders are going to come into this market and bid it higher than my price or offer lower than my price if I sold?â
The solution is to change your mind, to change the way you think. [Youâve] got to eliminate the potential to think that the marketâs going to disappoint you. And the way [you] eliminate the potential is by understanding that trading is not about being right or wrong. Itâs a probability game.
There are stages of development such as learning how to think in probabilities so the market doesnât have the potential to cause us to feel emotional pain.
When you put on a trade and it doesnât work, all it really means is that some of the traders didnât come into the market that had the same belief that you had, or the same conviction about this market doing whatever it is you thought it was going to do. You have to learn to walk away.
We canât predict collective human behavior. The methodologies that we have access to, these mathematical formulas, do that for us. But you have to understand that thereâs no possible way that these mathematical formulas can predict the outcome of these patterns on a trade by trade basis, only on a series of trades.
So when I get a signal from my methodology, at the most fundamental level what this is telling me is that the odds are in my favor that somebody is going to come into the market (this is what the pattern means) and bid it higher than here if I bought or offer it lower than here if I sold. Thatâs all that itâs saying. Now theyâre either gonna come or theyâre not, and so as a result I donât look at this as being a ârightâ or a âwrongâ; I look at this as "How much distance am I going to give the market to move away from my entry point to tell me that theyâre either going to come or theyâre not, and any further is not worth the cost of finding out.â
Once you shift perspective, everything changes. âDonât think, thereâs nothing to think about. When the pattern presents itself, thereâs nothing to think about.â
I was "accused " of having autistic tendencies and that my thinking is too rigid.
For me the brain is sort of a computer but to have 2 computers acting against each other is a stretch, but even if that is the case, I still don't understand how the sub-conscious mind will WANT it's host/body to be so ill that the host will die or lose money or something else that I cannot think of now.
I would appreciate an explanation or a link to an explanation (if it will be related to trading it would be even better).
Gabe